■ By Matt McPherson / Columnist
The stagnant commercial real estate market in the San Jacinto Valley is experiencing resurgence, steadily rising on the coattails of the booming residential market. With home equity up 19 percent in the city of Hemet, and 14 percent in the city of San Jacinto over the last 12 months, a surge in commercial sales is reflected in the number of recent closings and commercial properties presently in escrow.
The catalyst in Hemet was the sale of Ramona Plaza on the northeast corner of Florida and San Jacinto avenues back in January for $11.1 million, which set the stage for downtown commercial at $108 a square foot. Other notable commercial sales that have definitely contributed to the economy are Popeye’s Louisiana Kitchen on the west end, which is consistently busy from morning until closing. Jimmy John’s sandwich shop and Les Schwab Tires were also warmly welcomed by the community and are anticipated to grow out on the booming west end. Another positive visual is the exterior facelift and interior remodel of the Hemet Valley Mall, which is expected to attract more tenants, but some speculate that the national decline in the Sears business may lead to the loss of the dominant anchor tenant.
AD Engineering, the engineering firm for the construction of the KPC Towne Center, which houses Burlington Coat Factory, Sprouts, and Ulta, just finalized plans for a 40,000-square-foot addition to the east of the existing shopping center. One 24,000-square-foot building and two 8,000-square-foot buildings are planned for the expansion. The KPC Group, which owns numerous commercial, retail, and medical facilities throughout the valley, also owns the former Kmart building – and speculation about what’s to come is being fueled by the recent activity there.
Toward the east of Hemet, the old Millie’s building is in escrow and will be closing this month, home to a new high-end seafood restaurant. The southwest corner of Yale Street and Florida Avenue will be a Taco Bell, and the chain link fence around the northwest corner of Stanford Street and Florida Avenue hints at a potential new gas station. The successes of new businesses popping up and down Florida Avenue are emerging as beacons for other investors and businesses to follow. Slowly but surely the empty buildings and spaces along Florida Avenue are selling, catching the eye of other national food chains and retailers.
Over the last 12 months, Hemet has seen the closing of more than 30 commercial properties ranging from $21,000 to more than $11 million. Seven properties sold for at least $1 million or more. Demographic issues such as a median income just above poverty level and the recent surge in crime throughout the city of Hemet has discouraged many large retailers from pursuing any locations within the city.
Light industrial to large scale manufacturing has been rumored to be looking in and around the airport in west Hemet, but nothing solid has yet materialized. Such a strategy would be ideal in that it would create much needed jobs for the local community, thereby increasing the median income. This subsequently would justify the entry of larger retail stores, highly desired by a community who is anxious to spend their money in town.
Many notable sales and existing escrows in San Jacinto can be attributed to Measure AA or the taxation and regulation of cannabis after Proposition 64 was passed statewide. The marijuana industry is anticipated to generate significant tax revenue and wages for a struggling economy here in the valley and is echoed by the number of commercial and industrial buildings now in escrow. Many of these escrows are contingent upon the decision by the San Jacinto City Council in determining how this rapidly-evolving business venture will be regulated and taxed.
Over the last 12 months, 15 commercial properties closed in San Jacinto ranging in price from $150,000 to $2.4 million. Five of the 15 properties sold for at least $1 million or more, which indicates a healthy recovery in commercial enterprises throughout the city of San Jacinto.
With more and more commercial properties going into escrow, the next year should be exceedingly prosperous for the San Jacinto Valley. Economic factors, crime, and a low-income demographic continue, but the success of businesses like Popeye’s, combined with the affordability of commercial land and retail centers, are beginning to catch the eyes of larger investors, developers and commercial chains. Stay tuned for a pleasant transition here in the valley over the coming months.
Matt McPherson is a licensed real estate agent with Coldwell Banker Associated Brokers, BRE # 01362837. Reach him at 951-315-7914 or McPhtown@aol.com.